With three weeks remaining before a new governor takes over, the Romney administration yesterday launched a major change in the state's auto insurance system that will take three years to implement and could affect one of every four drivers in the state.
The state insurance commissioner, Julianne M. Bowler , said she was moving to a system where drivers that no carrier wants to insure would be assigned to individual companies rather than placed in a pool where their losses are shared.
Under Bowler's assigned-risk plan, premiums for drivers assigned to a carrier would not change, but those drivers would lose the ability to select their own insurance company and could lose access to pricing discounts offered by their current insurer.
Bowler offered no estimate of how many drivers would be affected, but said insurance companies would be barred for at least the next three years from not renewing the policies of at least 75 percent of the state's drivers, those with clean records for the last three years. The state has approximately 4 million drivers.
State Senator Andrea F. Nuciforo Jr. , a Pittsfield Democrat and the cochairman of the Legislature's Financial Services Committee, criticized Bowler for trying to revamp the state's auto insurance system on a piecemeal basis.
"We should leave it to the next governor to take a comprehensive look at this," said Nuciforo, a critic of the Romney administration's auto insurance proposals.
A spokeswoman for Governor-elect Deval Patrick , who could scrap the Romney assigned-risk plan, declined to comment pending further review.
In her decision and in a statement, Bowler defended her decision to move ahead so late in Romney's term and noted an assigned-risk plan has been in the works for close to four years, stalled repeatedly by court challenges from several of the state's largest automobile insurers.
"Reform is long overdue," she said. "Companies will now be responsible for all their policies, forcing responsible management of losses and a greater incentive to fight fraud in the marketplace, which means lower rates for drivers."
The Massachusetts Insurance Federation, which represents most of the automobile insurers pushing for sweeping changes in the state's auto insurance system, said an assigned-risk plan would keep carriers from leaving the state. Sentry Insurance of Stevens Point, Wis., left in July 2005, citing concerns about the unfair distribution of drivers no company wants to insure.
"The structure and unfair operation of the Massachusetts high-risk pool has been a principal reason why two-thirds of the companies that were operating here in 1990 have withdrawn from the market or gone out of business," said James T. Harrington , executive director of the federation.
Under the current system, agents representing many of the state's higher-risk drivers are assigned to companies based on market share. The client base of many of these agents varies dramatically, so many companies have been unfairly saddled with a disproportionate share of the highest-risk drivers.
The existing system also lets companies dump individual drivers they don't want to insure into a pool, where losses are shared based on company market share. Drivers never know whether they are in the pool.
Under the assigned-risk plan, companies will be allowed to choose which drivers they want to insure using virtually any criteria they want. Those drivers that cannot obtain a policy from a company will be assigned to a carrier for coverage, with assignments based on market share.
The process will start April 1, with newly licensed drivers or drivers moving here from out of state. It will expand on July 1 to include drivers with very poor driving records, 10 or more points.
On April 1, 2008, all other drivers will be included, except those who have had clean driving records for the previous three years. The clean drivers will be subject to assignment on April 1, 2010, although Bowler directed a quasi-government industry group to come up with a system that would give companies an incentive not to designate those drivers for assignment.
Stephen D'Amato , a consultant to the Center for Insurance Research in Cambridge, said eventually insurers will be able to put as many as a million drivers up for assignment for virtually any reason. He said the phase-in period only delays the adverse consequences for consumers.
"It's like lengthening a fuse on a bomb," he said. "Eventually the bomb explodes."
Bruce Mohl can be reached at mohl@globe.com.
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